Taxpayer Rectifies Excess Salary Income Declaration with Revised Return: ITAT

In India certain tax provisions are specifically designed to impose penal provisions on assessee for failure to comply with the mandatory laws. Section 271(1)(c) is one of such provisions which imposes penalty if a person fails to furnish accurate details of income or conceals his income while filing the income tax return. In such case he will be liable to pay a penalty of 100% to 300% of the tax payable on the concealed income. If a taxpayer files a revised return and reports such concealed income in the revised return, then such income gets reported legally as the revised return replaces the original return.

Mumbai bench of the Income Tax Appellate Tribunal has decided on a case where assessee corrected certain errors in the income tax return by filing a revised return post scrutiny notice.

Issues Involved:
Appellant Rohit Chatterji, an individual based Singapore had not reported income from other sources and house property in the original income tax return due to best available information at that time. However, AO served him notices for Non-declaration of incomes and imposed penalty upon him. Assessee filed a revised return later on. Will he be liable for penalty u/s 271(1)(c) of the Income Tax Act,1961?

Facts of the case explained:
Assessee, an individual residing in Singapore, filed income tax return on 30.08.2015 declaring total income of Rs.12,05,86,110/- which included 50% of the rental income of a joint property owned with his wife. He received scrutiny notices for not declaring Income from other sources amounting to Rs.6,21,652/- and 100% of the House Property income for Rs.23,71,076/-. Consequently, the AO initiated penalty proceedings under Section 271(1)(c) for the alleged concealment of income.

Assessee filed a revised return on 30.07.2017 including the above said incomes. Representative of the assessee contended that, the difference in assessment years between India and Singapore delayed the availability of correct income details, which led to the revised return being filed during the assessment proceedings. However, contention of the respondents were of that the assesee would not have reported the additional incomes had it not been for the scrutiny notices. In previous years returns, assessee had reported rental income at 100% erroneously, however he corrected the error in relevant assessment year and reported 50% income since it was a joint property. However, after scrutiny notices he had reported interest income as shown in 26AS and 100% rental income. AO had levied a penalty of Rs.9,24,760/- even after assessee had submitted all the evidence, correction in revised return and payment of applicable taxes.

Conclusion:
It was observed by the Bench that there was no intention of concealment of income. Assessee was anyways going to file a revised return due to overstatement in his salary income which was then reduced in revised return. Considering the facts that assessee declared all the differential income and assessment was completed months after assessee filed revised return, it was held that the levy of penalty was not correct as per Section 271(1)(c) and the same was ordered to be deleted.